PSD’s duplicitous discourse exposed by the European Commission: The Government launches committees and public commitments for joining the euro, but its fiscal policy moves us further away
Romania does not meet three of the four key criteria for euro adoption, according to the Convergence Report released by the European Commission. Government’s pro-cyclical fiscal policies (tax cuts, wage and pension increases, lost investment when the economy is growing strongly) move Romania away from its euro entry target. The report exposes PSD’s double-dealing discourse: the statements present the euro adoption as strategic objective and a committee led by Prime Minister Dăncilă is established, while the facts show they are constantly moving away from this objective.
The main conclusions of the Convergence Report on Romania:
• Romania no longer fulfills three of the four convergence criteria: the long-term interest rates criterion, the criterion on price stability and the criterion on central bank independence from the Executive. Romania fulfills only the criterion on public finances.
• On the central bank full independence, it should be noted that the text of the NBR law referred to by the European Commission applies since 2004 and was also flagged in the Convergence Report of 2016. Therefore, the sole liability of the current administration is not operating the amendments requested by Brussels in the previous report.
• High inflation was fueled by the surge in consumption driving an acceleration of imports, but also by the hikes in public wages outpacing labor productivity, i.e. the fiscal policies promoted by the three PSD governments of 2017 and 2018, on which both the media, as well as the European Commission and the IMF have repeatedly warned.
PSD sets up committees
On March 21st, the government approved a decree for establishing a committee to prepare the timetable for Romania’s euro adoption. The committee was announced as an essential step towards joining the Eurozone, with statements by Prime Minister Viorica Dăncilă and PSD Chairman Liviu Dragnea, both complaining about an alleged lack of political consensus in this direction. The problem was that an inter-ministerial committee set up by the Ciolos government already existed at government level.
Prime Minister Dăncilă’s initiative was announced by PSD chairman, Liviu Dragnea, who said he wanted Romania to join the euro in 2024.
The committee for joining the euro is chaired by two co-presidents – the prime minister and head of the Romanian Academy, despite the lack of relevant background of the latter. Instead, the governor of the central bank – institution with a key role in joining the euro – is only the vice-president of the committee.
„It will have a broad representation, so that we can have a proper debate allowing us to make the best decisions,” Dăncilă said when the committee was established.
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